7 August 2023 03:47 am
- The barter deal, agreed in 2021 for oil imported in 2012, faced delays due to last year’s forex crisis
- The barter deal involves exporting US$ 5mn worth tea to Iran monthly for 48 months, settling an outstanding oil bill of US$ 251mn
Sri Lanka is hopeful of starting tea exports to Iran under the barter deal from this month onwards with formalities to
Although, the barter deal was agreed in 2021 for oil imported in 2012, it was delayed due to the forex crisis last year, which plunged the country to its worst financial crisis.
Speaking to Mirror Business, Sri Lanka Tea Board (SLTB) Chairman Niraj de Mel revealed that SLTB soon plans to enter into an agreement with Ceylon Petroleum Corporation (CPC) to obtain the required funds from them to settle the tea exporters for their export consignments.
Under the barter deal, Sri Lanka intends to export approximately US$ 5 million worth tea to Iran on a monthly basis over a span of 48 months. This arrangement aims to settle the outstanding oil bill owed to Iran, which amounts to US$ 251 million.
“The necessary documentation from Iran has been just received, confirming the arrangement to the CPC. I’m sure it will give required comfort to CPC officials to release the money to us,” de Mel said.
Accordingly, SLTB plans to ink an agreement with CPC shortly.
“CPC Chairman has been very cooperative; he was willing to release the money, but again, you have to satisfy all these formalities,” he stressed.
“Funds will be released only when the National Iranian Oil Company via Trade Promotion Organisation of Iran confirms to CPC that they have received the payment.Then only we will release the money to exporters,” he elaborated.
Due to US sanctions imposed on Iran in 2012, Sri Lanka’s tea exporters faced challenges in receiving export proceeds from Iranian buyers, as there was no accepted payment mechanism through the banking system.
Payments were often routed through intermediary countries, leading to significant delays in receiving funds.
The additional US sanctions have further complicated the process of exporting tea to Iran.
As a result, Iran, which used to be the fifth-largest importer of Ceylon Tea, did not appear among the top ten largest importers during the first half of the current year.
Ceylon Tea’s market share in Iran declined to less than a quarter from the nearly half it enjoyed before 2016.